ITALY DATA: June Services/Composite PMI: Expansionary But Export Demand Softens

Highlights of the May Swiss CPI print, with plenty of moving parts:

• CPI excl. housing rentals remained unchanged at -0.7% Y/Y after the category saw its quarterly update (2.6% vs 3.2% prior)
• Airfares continued their downward trajectory, now contributing -0.14pp to headline (-13.9% Y/Y vs -9.5% prior), lowest rate since March 2021
• This, together with lower fuel inflation and rental cars, brought down the transport category to its lowest rate since July 2023
• Food inflation meanwhile ticked up by 0.59pp to -0.25% Y/Y, adding 0.06pp to headline vs April
• The acceleration in the recreation category appears to be a mix of package holidays and some goods subcategories in the sector.

What remains is that CPI left the SNB's target range for the first time since March 2021, leaving intact market pricing for around 1/3 odds of a 50bp cut to -0.25% at the upcoming June meeting. USCHF saw no material move on the release, with support sitting at 0.8040, the decade lows seen on April 21, while resistance would stand at the key 0.8333 level.

Corrects labelling on chart. Dutch broadcaster NOS reports that Geert Wilders, leader of the right-wing nationalist Party for Freedom (PVV) has withdrawn from the coalition, collapsing the four-party gov't. Following late-night and early-morning discussions, in which Wilders demanded stricter asylum rules, Wilders posted on X: "No signature for our asylum plans. No adjustment to the Main Outlines Agreement. PVV leaves the coalition." As MNI noted in May, the coalition has been riven with divisions for some time (see 'NETHERLANDS: Pension Reform Amendment Split Risks Coalition Instability', 20 May). Last week, Wilders blindsided the other governing parties with the 10-point agreement that would sit on top of the coalition agreement (which took five months to negotiate).

• The move is an extremely risky one for Wilders. After recording a surge in popularity in late-2023/early-2024 after joining gov't for the first time, the party's support has declined amid the inevitable policy compromises that take place in multi-party Dutch gov'ts. This stands in contrast to the recovering fortunes of three moderate parties, the conservative pro-business People's Party for Freedom and Democracy (VVD) that also sits as part of the gov't, the centre-left/environmentalist GreenLeft-Labour (GL-PvdA), and the centre-right Christian Democratic Appeal (CDA).
• Collapsing the gov't risks either protracted coalition negotiations or the dissolution of the House of Representatives and snap elections. With the newer, populist parties that the PVV governed with - the anti-graft New Social Coalition (NSC) and agrarian Farmer-Citizen Movement (BBB) - having fallen into political obscurity, the PVV could find itself short of coalition options after any snap election.
• The timing of the collapse of the gov't is inopportune for the Western defensive alliance, NATO. The annual NATO summit is being hosted by the Dutch gov't at The Hague on 24-25 June.

Chart 1. General Election Opinion Polling, Seats and 4-Poll Moving Average

Source: Peil.nl, Verian, Ipsos I&O, MNI

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• 0QM5 96.375/125 put spread 5K blocked at 2, looks like a buyer.